Holiday home rates in Dubai is seeing signs of recovery and will pick up gradually
The holiday homes sector is passing through a challenging phase in the wake of a dramatic fall in tourism numbers due to the coronavirus outbreak, however industry executives are confident of a quick recovery as Dubai looks set to reopen the tourism industry from tomorrow.
Holiday home rates in Dubai, which dropped in line with conventional market, is seeing signs of recovery and will pick up gradually with the reopening of tourism sector in the emirate.
"The holiday home rates are less likely to go back to pre-pandemic levels anytime soon, amid significant damage to the global tourism market. However, holiday home providers can expect to see a slight increase in average daily rate by the fourth quarter as local and GCC tourism will pick up in Dubai," said Mohamad Shams, managing director at f?m Living.
"Demand for holiday homes as well as the rates will gradually come back to the pre-Covid 19 levels as the Dubai tourism sector recovers in due course of time," he said.
He pointed out that holiday homes are more spacious and offer better value for the money as they offer more economical option compared to serviced apartments.
Following the outbreak of coronavirus pandemic, the costs for maintenance of holiday homes has also increased due to additional requirement of hygiene and safety which will most likely be absorbed by the owners, the industry executives said.
30% drop in rates
Mahwussh Alam, managing director of OnePerfectStay, said rates for holiday home rentals dropped 30 per cent this year, especially during the Covid-19 phase which was balanced with maintaining 75 per cent average occupancy.
Alam is more optimistic about the outlook for the holiday homes market. "After the lockdown, we are seeing a rapid recovery in holiday homes business. As UAE is on its way to win the battle against Covid-19 and movement restrictions are being lifted, holiday homes business is expected to pick up. We envisage that we will revert back to similar rates as of September as the market finds its new normality," she said.
There were 10,766 active listings out of a total of 20,396 properties registered on Airbnb platform. Dubai's holiday homes market accounts for two per cent of emirate's total households.
Mahwussh Alam added that holiday homes is recovering faster than any other lodging solution in the hospitality segment.
"This industry is finding new customers who are looking for the 'Pay as you Go' no liability rental model. Also there is a segment of people who want to get back to normal life slowly and safely. This will put staycations in high demand and people would look for exclusively private spaces that will give a boost to the holiday homes market. We have a positive outlook for the rest of 2020," she said.
With local restrictions being relaxed, Mohamad Shams sees an increase in local staycations as holiday goers will prefer domestic options for safety and to reduce their exposure to risk.
"Offering special staycation packages for local citizens and residents will attract more occupancy in the months ahead. We have noticed high demand in this segment with more than 90 per cent of Abu Dhabi staycation in April this year was contributed by Dubai residents," he added.
Additional hygiene costs
Moving forward, holiday home providers will need to invest more in hygiene and safety as guests will demand higher standards from holiday home owners to ensure their safety against coronavirus, said Mohamad Shams, adding that overall hygiene will be considered more than relevant amenities that come along with the stay. The owners will have to provide safety kits on every check-in.
"Any additional costs in maintenance for the health and safety of the guests and employees must be absorbed by the holiday home providers as pricing still remains an important factor for lead conversions in the holiday home market. Holiday home providers must strategically engineer efficient ways to accommodate this additional cost in order to stay competitive," added Shams.
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